Google's strategy is to work with smartphone developers in emerging markets and to provide them with up-to-date versions of its free Android software so they can make great phones at low prices. It's the polar opposite strategy of Apple's, which has the company gearing up for the release of the iPhone 6, likely to cost $700.

The market for cheap smartphones is burgeoning. In the West, smartphones are ubiquitous, but in the developing world, most people don't have them.

9to5Google noted that Google had already partnered with manufacturers Karbonn, Micromax, and Spice for the first Android One devices. Karbonn is the manufacturer that made the A50S, the smartphone priced at only $43.

The bet here seems to be that in the future, it will feel weird to pay large sums of money for a phone. Generally, the history of computing shows that prices drop over time even as devices become ever more powerful. Eventually, Google and its Android manufacturers seem to be hoping, people will face a choice: $700 for an iPhone or $100 for an Android that does the same thing.

Some people think that Android phones compete only with other Android phones and that Apple functions like a separate market. In that scenario, Apple is happy to exist as a minority brand as long as the minority it serves remains highly lucrative.